Foreclosure is a serious thing – your home is on the line. For that reason, the laws surrounding foreclosure are designed to make sure that the process is as fair as possible. One of the most important aspects of foreclosure law (and laws about debts in general) is that the bank or other company that’s trying to foreclose has to show proof that they actually own the mortgage debt. Otherwise, fraudsters could file a fake foreclosure, get control of your home, sell it, and pocket the cash.

As it turns out, however, even legitimate banks may be engaging in this kind of foreclosure fraud, using third parties and robo-signing software to falsify proof that they own your mortgage debt and have the right to foreclose.

No Proof, No Foreclosure

When you use a mortgage loan to purchase a home, who owns that home? Legally, you do – but the bank also has a claim on it and can force you to sell it in order to repay your mortgage if you don’t pay. That process by which the bank forces a sale is called “foreclosure.” Ohio is a judicial foreclosure state, so the holder of your mortgage debt will have to go through the courts to foreclose.

When the lender take you to court, they have to bring certain evidence. Most importantly, they have to prove that they actually own your mortgage loan. If you originally took out the loan from the same company that’s suing you, that’s fairly simply – they should still have all the original records. However, lenders frequently sell those mortgages to other companies.

In some cases, those mortgages are bundled together, chopped up in different ways, and sold on to multiple other buyers. Your mortgage could change hands countless times and you may never even be aware of it; you may just get a notice that your mortgage servicer (the company that handles collecting your checks and applying them to your account) has changed or you may not learn about it at all.

This bundling and sale of mortgages was particularly hot in the years leading up to the 2008 housing crisis, but is still ongoing today. It means that the paper trail of your mortgage can be tough to track, making it hard for the lender that eventually sues you to show appropriate proof of ownership in order to go through with the foreclosure. Long story short, it’s possible that your mortgage has been trading and shipped around so many times that no one can track down which bank or financial company actually owns it. Of course, the last company to purchase your mortgage believes they own it. If they decide to foreclose, how can they get their proof? That’s where foreclosure fraud comes in.

How Does Foreclosure Fraud Work?

In theory, there should be clear record of ownership as your mortgage is sold from company to company. There are also certain very specific legal procedures that must be followed and documented in order for that ownership to be valid. If any of those elements are missing, their claim on the mortgage is invalid and they can’t enforce the lien on your home – they can’t foreclose.

When mortgages trade hands dozens of times, it can be easy for that trail of documentation and procedure to be broken. However, the bank left thinking it holds your mortgage still wants to be able to foreclose. What are their options? They could either try to track down the chain of ownership, which may be impossible, or they could fake the documents.

Foreclosure Fraud May Be Ongoing

You’d think a $25 billion settlement would be enough to end the robo-signing practice and protect homeowners from foreclosure fraud. Unfortunately, there is evidence that the practice is ongoing. That means any homeowner who has fallen behind on payments may be at risk for a fraudulent foreclosure.

So, how can you protect yourself? The most important thing is to be aware and proactive. Keep all of the paperwork relating to your mortgage, including your monthly bills and any notifications you receive. That way you have a clear record of the information you’ve received, even if the bank doesn’t. If you get a letter or call about your mortgage loan from a company you don’t recognize, ask them where they got your information and how they’re related to your loan – and don’t give them any information. They may be fishing for details they can use to create false documents to prove ownership of the loan.

If you receive notice that your home is going to be foreclosed, you’ll need to act quickly. Gather the documentation for your mortgage and meet with an attorney. Your lawyer will help you request proof of ownership from the company that’s attempting to foreclose and can help you challenge the validity of that proof. If the proof isn’t good, the foreclosure will be thrown out.

If you believe you’ve been the victim of foreclosure fraud or other scam that threaten your home, you should also contact an attorney to ask about your rights and legal options.